12th Class Business Studies Financial Market / वित्तीय बाजार Question Bank

done Financial Marketing (Long) Total Questions - 21

• question_answer1)
  Explain the various Money Market Instruments.
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• question_answer2)
  What are the methods of floatation in Primary Market?
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• question_answer3)
  Explain the Capital Market reforms in India.
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• question_answer4)
  Explain the objectives and functions of SEBI.
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• question_answer5)
  Explain the various segments of NSE.
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• question_answer6)
  'R' Limited is a real estate company which was formed in 1950. In about 56 years of its existence the company has managed to carve out a niche for itself in this sector. Lately, this sector is witnessing a boom due to the fact that the Indian economy is on the rise. The incomes of middle class are rising. More people can afford to buy homes for themselves due to easy availability of loans and accompanying tax concessions. To expand its business in India and abroad the company is weighing various options to raise money through equity offerings in India. Whether to tap equity or debt. Market whether to raise money from domestic market or international market or Combination of both? When their to raise the necessary finance from money market or capital market. It is also planning to list itself in New York Stock Exchange to raise money through ADR's. To make its offerings attractive it is planning to offer host of financial plans products to its stakeholders and investors and also expand it's listing at NSE after complying with the regulations of SEBI.

  (i) What benefits will the company derive from listing at NSE?

  (ii) What are the regulations of SEBI that the company must comply with?

  (iii) How does the SEBI exercise control over 'R' Limited in the interest of investors?

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• question_answer7)
  NSE Indices                             World Markets

  Index	Current	Prev.	%CHG	Index	Current	Prev.	%Change
  S & P CNX Nifty	3641.1	3770.55	-3.43%	NYSE Composite	8926.88	9120.93	-2.13%
  CNX Nifty Junior	6458.55	6634.85	-2.66%	NASDAQ Composite	2350.57	2402.29	-2.15%
  CNX IT	5100.5	5314.05	-4.02%	DOW Jones I.A.	12076	12318.6	-1.97%
  Bank Nifty	5039.05	5251.55	-4.05%	S & P 500	1377.95	1406.6	-2.04%
  CNX 100	3519.35	3640.35	-3.32%	Nikkei 225	16676.9	17178.8	-2.92%

  The above figures are taken from the website of national stock exchange of India. They illustrate the movement of NSE stock indices as well as world stock indices on the date indicated. Questions. What do you mean by a stock index? How is it calculated? What conclusions can you draw from the various movements of NSE stock indices? What factors affect the movement of stock indices? Elaborate on the nature of these factors. What relationship do you see between the movement of indices in world markets and NSE indices? Give details of all the indices mentioned above. You can find information on the web or business magazines. The teacher should help the students in answering these questions. They can look at the website mentioned above and also website of SEBI, i.e., www.sebi.gov.in for educational material. This exercise will help the students in understanding the stock markets clearly and also create interest therein.
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• question_answer8)
  Meca Ltd. a reputed automobile manufacturer needs Rupees ten crores as additional capital to expand its business. Atul Jalan, the CEO of the company wanted to raise funds through equity. On the other hand the Finance Manager, Nimi Sahdev said that the public issue may be expensive on account of various mandatory and non - mandatory expenses, it was decided to allot the securities to institutional investors.                                                [Delhi 2017]
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• question_answer9)
  Reshu's father has gifted her the shares of a large cement company with which he had been working. The securities were in physical form. She already has a bank account and does not possess any other forms of securities. She wished to sell the shares and approached a registered broker for the purpose. Mention one mandatory detail which she will have to provide with the broker.                                                 [CBSE Sample Paper, 2016]
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• question_answer10)
  ABC Ltd. issued prospectus for the subscription of its shares for ` 500 crores in 2008. The issue was oversubscribed by 20 times. The company issued shares to all the applicants on pro - rata basis. Later SEBI inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of ` 5 crores and banned its three executive directors for dealing in securities market for three years. Identify the function and its type performed by SEBI in the above case.                                                      [CBSE Sample Paper, 2017]
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• question_answer11)
  These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this there is another market in which unsecured and short - term debt instruments are actively traded every day. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.                                                         [Delhi 2017] (a) Name the function being performed by the market in the above case. (b) Also, explain briefly three other functions performed by this market.
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• question_answer12)
  Mission Coach Ltd. is a large creditworthy company that manufactures coaches for the Indian Railways. It now wants to export these coaches to other countries and decides to invest in new hi - teach machines. Since the investment is large, it requires long - term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the expenses of floatation cost, the company decides to tap the money market. (a) Name and explain the money - market instrument the company can use for the (b) What is the duration for which the company can get funds through this instrument? (c) State any other purpose for which this instrument can be used.                                                        [AI 2015]
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• question_answer13)
  Ganesh Steel Ltd. is a large and creditworthy company that manufactures steel for the Indian market. It now wants to cater to the Asian market and decides to invest in new hi - teach machines. Since the investment is large, it requires long - term finance. It decides to raise funds by issuing equity shares. The issue of equity shares involves huge floatation cost. To meet the expenses of floatation cost, the company decides to tap the money market.

  (a) Name and explain the money - market instrument the company can use for the above purpose.

  (b) What is the duration for which the company can get funds through this instrument?

  (c) State any other purpose for which this instrument can be used.                             [Delhi 2015]

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• question_answer14)
  Squib Ltd. is a large creditworthy company operating in the Kashmir Valley. It is an export oriented unit, dealing in exclusive embroidered shawls. The floods in the Valley have created many problems for the company. Many craftsmen and workers have been dislocated and raw material has been destroyed. The firm is therefore, unable to get an uninterrupted supply of raw materials and the duration of the production cycle has also increased. To add to the problems of the company for advance payment or cash payment on delivery. The company is facing a liquidity crisis. The CEO of the company feels that taking a bank loan is the only option with the company to meet its short - term shortage of cash. As a finance manager of the company, name and explain the alternative to bank borrowings that the company can use to resolve the crisis.                                                                                             [CBSE Sample Paper, 2016]
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• question_answer15)
  These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. In addition to this, there is another market in which unsecured and short - term debt instruments are actively traded every day. These markets together help the savers and investors in directing the available funds into their most productive investment opportunity.

  (a) Name the function being performed by the market in the above case.

  (b) Name the market segment other than the capital market segment in which unsecured and short - term debt instrument are traded. Also, give any three points of difference between the two.                                    [AI 2017]

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• question_answer16)
  This method of new issues gives pre-emptive right to the existing shareholders over such securities. 'Which method of floatation is highlighted in the given statement? Or Hari has 200 shares of Reliance Industries. Reliance comes out with a fresh issue of shares and Hari received an offer to buy 1 more share of Reliance for every two shares held by him. Discuss the type of issue described. Or Fabmart Pvt. Ltd. wants to raise ` 200 crores through issue of equity shares. Before offering the new shares to outsiders, company is required to offer them first to its existing shareholders. Which method of floating new issue is indicated in the given case?
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• question_answer17)
  Supriya's grandmother who was unwell, called her and gave her a gift packet. Supriya opened the packet and saw many crumpled share certificates inside. Her grandmother told her that they had been left behind by her late grandfather. As no trading is now done in physical form, Supriya wants to know the process by adopting which she is in a position to deal with these certificates.

  (a) Identify and state the process.

  (b) Also, give two reasons to Supriya why dealing with shares in physical form has been stopped.

  [CBSE Sample Paper, 2015]

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• question_answer18)
  Mr. Vikas Mehra was the Chairman of IBM Bank. The bank was earning good profits. Shareholders were happy as the bank was paying regular dividends. The market price of their shares was also steadily rising. The bank was about to announce the taking over of 'UK Bank'. Mr. Vikas Mehra knew that the share price of IBM Bank would rise on this announcement. Being a part of the bank, he was not allowed to buy shares of the bank. He called one of this rich friends Mukand and asked his to invest ` 4 crores in the share of his bank promising his the capital gains. As expected, after the announcement, the share prices went up by 50% and the market price of Mukand's shares now ` 6 crores. Mukand earned a profit of ` 2 crores. He gave ` 1 crore to Vikas Mehra and Kept ` 1 crore with him. On regular inspection and by conducting enquires of the brokers involved, the Securities and Exchange Board of India (SEBI) was able to detect this irregularity. SEBI imposed a heavy penalty on Vikas Mehra. Quoting liens from the above paragraph, identify and state any two functions performed by the SEBI in the above case.                                                                                                                                                  [AI 2016]
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• question_answer19)
  Ridhima Industries is planning to issue equity shares to raise funds worth ` 1,000 crores for its expansion and growth. The company has 4 directors and each director is suggesting different method for the new issue. Identify the method of floatation indicated by each director:

  (i) Issue a prospectus to invite public to apply for shares.

  (ii) Use online system of stock exchange.

  (iii) Offer the entire new issue to Life Insurance Company.

  (iv) Issue shares to public via issue houses and stock brokers.

  (v) First ask existing shareholders to apply for new issue as it is a compulsory requirement under Companies Act.

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• question_answer20)
  The directors of a company want to modernise its plants and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.              [Delhi 2004]     
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• question_answer21)
  “Unicon Securities Pvt. Ltd.” was established to deal in securities. It was registered as a stock broker with National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) to trade in securities listed at these exchanges. It is also a depository participant with CDSL and NSDL. In the first three years, it developed its business successfully. After that the composition of Board of Directors changed. Some customers complained to the customer care centre of the company that shares purchased by them and for which the payment has been duly made, were to transferred to their D'mat Accounts by "Unicon securities Pvt. Ltd." The executive of customer care Centre promised the aggrieved customers that their shares will be transferred to their respective D'mat Accounts very soon. But the company delayed the matter and didn't transfer the shares of the customers to their D'mat Accounts. This eroded investors confidence and multiplied their grievances.

  (a) Identify the step trading procedure in a stock exchange which has not been followed by "Unicon Securities Pvt. Ltd."

  (b) Name the Apex statutory body of capital market to whom customer can complain to redress their grievances.

  (c) Write two values not followed by Unicon Security Pvt. Ltd.                           [CBSE Sample Paper, 2017]

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